WMM(002149) 国盛证券·2024-12-24 00:38Investment Rating - The report initiates coverage on Western Materials with a "Buy" rating, citing its strong position in the rare metal materials industry and its potential for rapid growth in the military sector [7][150] Core Views - Western Materials is a leading rare metal materials platform in China, with a focus on titanium alloys and layered metal composites used in high-growth sectors such as next-generation fighter jets, missiles, naval equipment, and nuclear power [2][5] - The company is expected to benefit from the rapid expansion of downstream demand in military applications, particularly in missile, naval, and aviation equipment [2][6] - Western Materials has completed capacity expansion, with its military-grade titanium alloy production capacity doubling to 3,000 tons, positioning it to meet the growing demand in defense-related industries [6][100] Demand-Side Analysis - Missiles: Titanium alloys are widely used in missile casings to reduce weight and improve structural performance. After a period of suppressed demand, missile-related titanium alloy demand is expected to surge by 2025 [2][58] - Naval Equipment: Titanium alloys are ideal for naval applications due to their corrosion resistance and strength. The demand for titanium in naval equipment, particularly submarines and underwater vehicles, is expected to grow significantly [2][62] - Aviation: Titanium alloys are critical for military aircraft and engines, with usage ratios increasing as aircraft performance improves. The demand for titanium in aviation is expected to continue growing [2][64] - Armored Vehicles: Titanium alloys are increasingly used in armored vehicles for lightweighting and enhanced protection, presenting a significant market opportunity [2][97] Supply-Side Analysis - Western Materials has doubled its military-grade titanium alloy production capacity to 3,000 tons, with total titanium alloy capacity reaching 10,000 tons. This expansion is aimed at meeting the rapid growth in downstream demand [6][100] - The company has also initiated a project to produce large-scale, low-cost titanium alloys for marine engineering, which is expected to further enhance its production capabilities [100] Future Development Strategy - Western Materials follows a "1+3+X" development model, aiming to become a comprehensive rare metal materials platform. This includes focusing on titanium alloys, layered metal composites, rare and precious metals, and filtration materials [9][102] - Key subsidiaries include Tianli Composite (a leader in layered metal composites), Xinorui (the sole domestic supplier of nuclear-grade stainless steel and nickel-based alloys for nuclear reactor control rods), and Feierte (a pioneer in metal fiber products) [9][104][108] Financial Projections - The report forecasts Western Materials' net profit attributable to shareholders to reach 184 million, 409 million, and 606 million yuan in 2024, 2025, and 2026, respectively, with corresponding PE ratios of 48X, 22X, and 15X [7][150] - The company's titanium products are expected to see revenue growth of -2.40%, 51.00%, and 29.51% in 2024-2026, with gross margins of 23.01%, 26.27%, and 27.98%, respectively [111] Industry Comparison - Western Materials is compared with peers such as Western Superconductor, Baoti, and Gaona Aero Material. The company's valuation is considered reasonable, with a PE ratio of 48X for 2024, higher than peers but justified by its growth potential [142][150]